BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF

XTWY

Market cap $253M

Treasuries are poised for their longest monthly winning streak in three years on September rate cut bets.

The recent equity rout has led investors to seek refuge in Treasury securities, perceived as safe-haven assets.

Patience is required when embracing long-dated bonds and corresponding exchange traded funds. In standard market environments, intraday price action for long duration Treasurys usually isn't breathtaking.

The Federal Reserve's torrid pace of interest rate increases in 2022 had the predictable impact of sending bond yields soaring and prices tumbling. One of the most clear results of those rate hikes was yields on cash instruments also rose.

Prior to 2022, many retail investors likely eschewed buying individual Treasury bonds from the U.S. government. That's because they didn't offer much in the way of income.

With interest rates possibly at their peak, investors may want to consider longer-duration Treasury ETFs before the Fed begins cutting rates. After all, the U.S. 10-year Treasury note was yielding 4.017% as of midday Tuesday, up 50 basis points from a year ago.

High inflation, the Fed aggressively hiking rates, and a so-called “term premium” has pushed up long-term Treasury yields. In fact, the yield on the 10-year U.S. Treasury went up 30 basis points from where it started this year, to 4.18%.

With the end of the year approaching, it could be a good time to consider tax-loss harvesting to capture potential tax benefits. And given the performance in long-dated Treasuries over the last two years, U.S. Treasury ETFs are an easy, low-cost way of maintaining Treasury exposure while realizing losses for tax purposes.

The world's largest bond market made a remarkable recovery in November after experiencing difficulties earlier in 2023. It is now on track for its best month since March.